Nigerian Equities Market Rebounds after Presidential Election

Nigeria’s stocks and bonds rose yesterday as investors
increased demand for securities following the conclusion of the presidential
election.
Investigation revealed that the Nigerian stock market, which depreciated 0.61
per cent last week, opened this week with a gain of 0.57 per cent yesterday.

Specifically, the Nigerian Stock Exchange (NSE) All-Share
Index rose to 32,700.12, from 32,515.52, while market capitalisation added N68
billion to close at N12.194 trillion, from N12.125 trillion recorded last
Friday.

The market had gained 6.6 per cent before the postponement of the presidential
election from February 16.

The postponement of the election led to market decline by 0.61 per cent last
week as most investors adopted a wait-and-see strategy.

However, the conclusion of the presidential election over the
weekend and collation of results have reduced political uncertainty as some
investors increased demand for stocks, leading to a growth of 0.57 per cent.

It was gathered that there was also a rise in bond prices which was more
pronounced in longer-dated, local currency bonds such as the 2028 bond.

Yields on the 10-year paper fell to 14.5 per cent yesterday
from a previous close of 14.68 per cent.

“Barring any negative surprises at the polls, we anticipate a positive start to
this week’s trading as investors price in improved certainty upon conclusion of
the general elections,” analysts at Vetiva Capital, told Reuters.

The election had been scheduled to take place on February 16,
but was postponed by the Independent National Electoral Commission (INEC),
citing problems in delivering ballot papers and results sheets to some parts of
the country.

Market operators had said the postponement was not good for the stock market.

For instance, Chairman of Association of Stockbroking Houses
of Nigeria (ASHON), Partick Ezeagu said the postponement would lead to more
uncertainty in the stock market in particular and economy in general.

According to him, uncertainty is the greatest phobia that afflicts any market
and even more applicable to the capital that is very sensitive to uncertainty
in the political fate of a sovereignty.

“The capital market in Nigeria is sad, the reset delay in the
conduct of our national election and the fact that it happened less than six
hours before the election was to commence. Investors will react negatively
unless a very credible reason is adduced and effectively disseminated
urgently,” Ezeagu said.

Similarly, Group Chief Executive Officer of Emerging Africa
Capital Group, Mrs. Toyin Sanni, said the postponement had lengthened the
waiting time for investors who had already adopted wait-and-see approach to
prospects of investing in Nigeria.

“In investments, the longer the waiting time for any outcome,
the higher the perception of risk. Also, the postponement indicates that we may
not as a country have all our acts all together, thus increasing concerns about
the possibility of the election process being smooth and hitch free,” she said.

Sanni added that the development could also raise, in some
quarters, fears that the process itself may be manipulated.

“Anything that reduces the perception of transparency affects our
attractiveness and credibility and investment destination,” she said.

Another stockbroker, Mr. David Adonri of Highcap Securities
Limited said the postponement of the election at the dying minute is an insult
to the electorate.

“Every sector of the economy including the capital market
will be disastrously affected. It will further erode investors’ confidence,
which is already at a low ebb,” Adonri said.

Also, Mr. Sola Oni of Sofunix Investment, said the postponement is a sad
commentary that will deepen Nigeria’s political risk with dire consequences on
investment decision.

“The shock caused by the announcement may jolt foreign
portfolio investors who have been apprehensive of the presidential election. It
is not unlikely that trading on the stock market may be moderated by this
development as it is capable of further eroding investor confidence in our
market. Every political decision has direct or indirect impact on the financial
market. I think the time has come for our leaders to stop making Nigeria a
laughing stock before the international community,” he said.

However, Garba Kurfi of APT Securities and Funds Limited said
the postponement may not have much negative impact on the market given the
growth the market has recorded in the last two weeks.

“Although it has a cost to the economy but may not affect our
market due to expectations of companies’ results which have started coming into
the market. We are expecting the market to continue to rise in anticipation of
good results to be declared by companies,” he said.
But despite the announcement of corporate earnings with dividends last week,
most investors remained on the sidelines, leading to a decline in the market.